As parents, you’re always worried about how you’re doing in raising your children. Are you teaching them all they need to know for the future? Are you giving them everything they need without spoiling them rotten? Sometimes, there’s a fine line between too little and too much with your kids. Many parents struggle to teach their kids about finances and. Take these tips to help your kids get well on the way to healthy money habits.
Over half of kids earn an allowance in exchange for some sort of chores. Just how much they earn varies based on age, what tasks they have to complete, or grades in school. As the parent, you get to decide whether the amount is fixed, changes based on grades or chores, or follows some other design. A good rule of thumb is to give $1 to $2 per week based on their age, with additional amounts perhaps available for special chores or earning high grades.
Starting a Business
If you don’t want to spend the money on an allowance, you can try letting your kids earn their own money by starting a business. There are many ideas out there beyond the classic lemonade stand, such as creating digital products, tutoring, or selling jewelry and other crafts. Funding their business by borrowing from friends and family or using their own savings also teaches them a lot about how to run a business and make a profit.
Teach a Healthy Split
It’s not enough to just get money into a kid’s hands. You have to teach them how to use it. Many parents teach their children to split earnings into amounts to spend and save. Some even include a giving category. This teaches kids that they can’t just buy everything they want with their money. Making a plan to save for large purchases helps them understand the worth of their money. Letting a child choose a cause important to them and setting a donation goal is another way to teach them responsibility and community.
One of the best ways children learn is through modeling. Instead of shielding them from money talks in your family, involve them. Let kids see your family earnings and budget, bills, and spending on necessities. Let them help plan the things you want to save for as a family. Once they get older, you can even let them get involved in the budgeting to help them be ready when they move out on their own.
For example, many elements of financial literacy can be taught surrounding homeownership. Mortgage payments aren’t the only expense in owning a house. You can also teach about repairs and maintenance. Also, kids can learn how property taxes are calculated and paid, and the impact the assessed value of a home has on taxes and sale prices.
Teaching Financial Literacy
Teaching your children to be financially literate isn’t an easy task, but it’s definitely an important one. Help them avoid issues with bad credit and bankruptcy in the future by letting them learn the hard lessons while they’re young and still under your wing. Visit Parental Journey for more ideas on teaching kids about money.